Home insurance exclusions: What your policy won't cover

No matter what type of home insurance policy you buy, there's a list of common problems (called "perils") that most insurance companies will not cover.

Knowledge is your best defense when you have a possible home insurance claim. Knowing exactly what your homeowners insurance policy covers and excludes also helps you determine whether you want to purchase additional coverage.

"So, a skunk in a car invades a bar..."

For example, do you know which of these problems is not covered by a home insurance policy?

A car careens off the street and crashes through your living room wall.

A skunk gets into your house and stinks up everything you own.

A foreign army invades the United States, destroying your house in the process.

Answer: You're not covered if an invading army destroys your house (acts of war are excluded), but you are covered if your house is hit by a car or perfumed by a skunk.

Things covered by home insurance policies

HO-2 policy

There are a variety of standard homeowners insurance policies. The most basic policy, HO-1, covers only a few perils and insurance companies have stopped selling it in most states. The HO-2, generally called the "broad form," covers 16 perils. They are the following:

Fire or lightning

Windstorm or hail

Explosion

Riot or civil commotion

Damage caused by aircraft

Damage caused by vehicles

Smoke

Vandalism or malicious mischief

Theft

Volcanic eruption

Falling objects

Weight of ice, snow or sleet which causes damage to a building

Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire-protective sprinkler system or from a household appliance.

Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system or an air conditioning or automatic fire-protective system.

Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system or of a household appliance.

Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component).

HO-3 policy

An HO-3 policy is often called a "special form" because it covers everything except certain perils outlined in the policy. It is the most popular type of policy. The standard HO-3 policy contains these exclusions:

Ordinance or law: such as demolition or construction required to bring your house up to code.

Earth movement: such as earthquakes, shockwaves, sinkholes, landslides and mudflows.

Water damage: such as floods, sewer back-ups and water that seeps through the foundation.

Power failure

Neglect: meaning you failed to take reasonable means to save your property during or after a loss.

War: including undeclared war and civil war.

Nuclear hazard

Intentional loss: meaning something you did on purpose with the intent to cause a loss.

Governmental action: such as the destruction, confiscation or seizure of covered property by any governmental or public authority.

It's a good idea to have a conversation with your home insurance agent, so you feel confident with the coverages in your policy.

What losses does your policy cover and not cover?

What additional coverage might you need given your situation?

Examples of home insurance exclusions

Since policies can differ by state and insurance company, the only way to know what your exclusions are is to read your own policy. If you come across something you don't understand, ask your agent or insurance company about it. Here are some scenarios that address home insurance exclusions.

Q: What happens if a wild animal sneaks into my home and wreaks havoc? A: You're covered. Technically, the animal vandalized your home. Vandalism is covered under most standard policies.

Q: What if I need a building code upgrade? A: Not covered. If your home suffers damage and you want to upgrade it when you repair, you'll have to do it at your own expense. A standard home insurance policy pays only for what you originally insured. However, some insurance companies sell a "rebuilding ordinance or law coverage" rider. This extra coverage pays a specific amount toward upgrade costs — but under this type of policy you have to suffer a disaster before it will pay to upgrade.

Q: My basement flooded and most of my possessions have been destroyed. Am I covered? A: No. For protection against floods, you'll need flood insurance. Also, water coming into your home from backed-up sewers is typically excluded, but you can purchase optional coverage to protect yourself from this.

Q: Can I make an insurance claim for my home's value plummeting after the city built a prison in the area? A: No. Selling cost is not insurable. Your home is insured for the amount you'll need to rebuild it and replace the contents.

Q: Am I covered for damage to my home that resulted from a power outage? A: Each policy contains coverage for the loss of food in your refrigerator and freezer, usually up to $500. Electronics, such as your computer, are not covered under standard home insurance policies if there's a surge when the power comes back on, unless the surge is due to a covered peril such as lightning.

Q: A company dumped pollutants into a stream that runs through my property. Am I covered? A: No. If something like this were to happen, the party responsible would be liable for your clean-up bill — probably after a lengthy court battle. But some insurance policies contain coverage to clean up oil spilled in your house by the oil company that fills your tank.

Q: Suppose lightning strikes a power line leading into my home. Are my damaged possessions covered? A: Yes. Any damage caused by lightning — such as fire or damage to electronics from a surge — is covered.

Q: One of my appliances caught fire and caused my hot water heater to explode. Am I covered? A: You're covered. This is an instance of what insurance companies call a "sudden and accidental loss."

Q: I'm running a small business from my home. Is my computer and office equipment covered? A: If you run a business out of your home, you should be insured separately. A simple home office might require only an endorsement to a home insurance policy, but a hair salon, day care or construction business poses greater potential liability and requires a separate business insurance policy. See our business insurance section.

Freaky incidents and home insurance exclusions

Q: A religious phenomenon damaged my home. Now what? A: You're covered. Every now and then you'll hear about something unusual, such as a house where oil is pouring out of the walls for no apparent reason and the Virgin Mary appears in the oil. If that happens to you, and you make a claim for the damage done to your walls, you're covered.

Q: What if a plane, train or automobile crashes into my living room? A: You're covered. Cars and trains fall under coverage for damage from vehicles hitting your house, while airplane damage is paid for by coverage for objects falling out of the sky.

Q: Suppose an antigovernment militia invades my neighborhood. Is my destroyed home covered? A: If the United States government determines that it was not an act of war, you should be covered. Acts of terrorism are covered, but not acts of war.

Q: A nuclear power plant problem irradiated my home. Are my home and possessions covered? A: No. Nuclear accidents are a standard exclusion. You'd have to go to the power company that owns the nuclear plant and get it to pay up.

Q: My house slid down a cliff. Am I covered? A: No. If you build or buy a house on a cliff, be aware of the risks involved. A standard home insurance policy won't pay if your house slides down because of a landslide or any other reason. That's considered "earth movement" and is excluded. Your best bet is to check with your agent about getting coverage for such an event. (If you live in California, a California Earthquake Authority policy will cover earth movement only if it is seismically induced, so if you live on a cliff overlooking the Pacific, you will need additional coverage.)

Q: My house, which was built over an old coal mine, was swallowed by a sinkhole. Am I covered? A: No, this is also excluded as "earth movement." This is a problem for homeowners in Coal Belt states, including Illinois, Ohio, Pennsylvania and West Virginia, but random sinkholes have appeared all over the country. While a home insurance policy doesn't cover sinkholes due to old mines, you can purchase coverage (known as mine subsidence insurance), usually from your state's Mine Subsidence Authority. Check with your state's department of insurance or your insurance agent.

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